Tag Archives: Day Trading

Making Trade Setups Come To You.

Posted by bclund in Trading and tagged with , , ,

About once every five years, against my better judgment, I get roped into going to a professional baseball game with my friends.  I always rationalize how “it might be fun this time,” but sure enough, by the time we get to the fourth or fifth inning I am bored out of my mind.

I mean I can only put up with so much….

…..ball…..strike….step out of batter’s box…..foul ball……foul ball……throw to first to keep runner honest……foul ball……foul ball……naked guy on field…..foul ball….foul ball…….balk……

If I’m going to go to a sporting event it has to be something with some action, like hockey, or basketball, or curling.

Last season I ended up going to a Los Angeles Angels game, and just as I suspected, it was a snoozefest.

However one of the things that I have to admit was pretty cool was how the servers now come to your seat to take your order, and then deliver the food right to you.

In life we are taught from an early age that we have to go after what we want, and that anything worth having is worth is worth pursuing.  But sometimes it’s nice to just sit on your ass and have a mega-beer and a double jalapeño nachos placed gently in your lap.

Can you believe that this guy actually got up to get his food.  Hah….what a loser!!!

When trading, it can also be to your advantage to have setups brought to you instead of having to hunt them down.  By using the “Triple F” method, you can set up your watch list’s to do just that.

The first “F” stands for “filtering”, the process by which you take your macro list of stocks and bring it down to an actionable one.  This can be done with EOD technical and fundamental scans or by just visually reviewing charts one by one in order to find candidates that are approaching entry points.

The results can then be put into three different groups; day trades, swing trades, and long-term trades (or no setup).  Transferring over your day trade and swing trade lists to your real-time charting software then sets the stage for the second “F”, which is “focus.”

Here you can configure and organize your stocks in a way that will keep non-movers out of your way, and bring potential trade setups right to you.

Swing trade candidates by definition will usually be farther away from entry points than day trade candidates, and you don’t want them to get in your way until they are ready to go.  Set alerts on these stocks at 50 cents below your intended buys points, and then minimize the list so it does not take up valuable screen real estate.

Now focus on your day trade list.  Set alerts there as well, which will tend to be closer to entry points than those on the swing list, but also make sure to set your list to auto sort every 5-10 seconds.  If your software has the capability, you want to sort by the “% change in average volume” column criteria.

This will then constantly push stocks to the top of your list that have the highest increase in volume relative to their average, and volume is what moves stocks.  If you don’t have that column criteria available, you can just use “Volume” instead, which although not as effective, will still push movers to the top of the list.

You can now limit yourself to monitoring the stocks on your day trade list that are constantly being brought to the top, and forget about those at the bottom.  If any stocks on your lists get near entry points, your alerts will trigger causing them to automatically be loaded into your chart windows.  Setups literally are brought to you.

This gives you the freedom to watch the indexes or market barometers, monitor news feeds, or look for intraday setups without worrying that you will miss a potential trade.  This system works best when looking for breakout trades, long or short, but can be modified to work for trades off of pullbacks to support or resistance.

And the third “F”….well there isn’t really one, but the “Triple F” system just sounded better than the “Double F” system.


“….we don’t need no stinking (third) F.”

(Note: If you are new to my blog, I post about all sorts of things.  Sometimes it involves something extremely personal, like creating a 30K baby or my Monster Trades.  Other times it deals with hot ex-porn stars who trade stocks.  And sometimes it’s about how to avoid “suicide”.  But a good place to start is The Best of bclund.  If you like what you read, please tell a friend.  If you don’t, please tell two friends.)

The Blog Post That Changed My Trading Life.

Posted by bclund in Trading and tagged with ,

Ever since I bought my first stock at the age of eighteen, I always had a job to rely on for my steady income.  This meant that I felt no pressure to trade and could be patient in waiting for the right market environment and right setups to arise.

However that changed when I sold my business in early 2005 and decided to trade full-time. I suddenly felt a “pressure” to trade, knowing now that this was my only source of income.

I had just come off of a twenty year run in a business in which sixteen hour days and six-day weeks were the norm.  If I was not constantly driving my business on a daily basis, not only would it stagnate, but it would ultimately fail.  Because of this ingrained mentality, NOT trading on a daily basis felt counter intuitive to me.

I abandoned the previous style of trading that had worked for me so well and switched over to a “hyper trading” mode.  I felt a need to constantly find setups to trade and thus I was continually switching between methodologies in an effort to drive my profits.

As you can guess this added up to a lot of frustration, a lot stress, and a lot of losing trades.

Then one day I came across a blog post on Trader X’s site called “Chasing Success.”

I talk to numerous people through email every week who are struggling to be successful at trading. And, I find two common traits in most of them:

1.) They trade too much – most of the people struggling make multiple trades daily, some as many as 10+ round trips.
2.) They have a lack of focus.

……I call this “chasing success”. The bottom line is the person does not spend enough time on any one method to really understand and execute it properly. They bounce around, and before they know it a lot of time has passed and they are still struggling.

If you pick something and stick to it, you get good at it. Once you get good at it – once you perfect it, THEN you can add something else to your arsenal. 

Remember, this was in  pre-StockTwits days, and up until that point I had never heard somebody talk so plainly and in such a common sense way about trading.  It was as if a lightning bolt struck me and shocked my out of my sinning ways.

It took a while to completely sink in and I had a number of stumbles along the way, but it was the beginning of the transformation of my trading life.  I began to take a “trade less, make more” approach and narrowed the types of trading setups I took to just a handful.

Trader X doesn’t post much anymore and he doesn’t seem to want to engage in tweeting (can you blame him), but he was a minimalist trader before it became the trend.  And from his site I not only learned a ton about trading, but it was my first introduction to other great trading teachers like Trader Mike, Trader Jamie, and the High Chart Patterns Group.

I can only wonder what would have happened if I had never found that post.

See The Complete “Chasing Success” Post (Trader X)

Wall St. Warrior (Trader Jamie)

High Chart Patterns Group (HCPG)

(Note: If you are new to my blog, I post about all sorts of things.  Sometimes it involves something extremely personal, like creating a 30K baby or my Monster Trades.  Other times it deals with hot ex-porn stars who trade stocks.  And sometimes it’s about how to avoid “suicide”.  But a good place to start is The Best of bclund.  If you like what you read, please tell a friend.  If you don’t, please tell two friends.)

 

 

 

Deconstructing A Trade: ELN 1/17/2012

Posted by bclund in Deconstructing A Trade, Trading and tagged with , ,

This trade failed because I didn’t manage it consistent with my reasons for entering it.

(Select 720pHD and enlarge when video starts)

(Note: If you are new to my blog, I post about all sorts of things.  Sometimes it involves something extremely personal, like creating a 30K baby or my Monster Trades.  Other times it deals with hot ex-porn stars who trade stocks.  And sometimes it’s about how to avoid “suicide”.  But a good place to start is The Best of bclund.  If you like what you read, please tell a friend.  If you don’t, please tell two friends.)

Thoughts On Paper Trading (And What Sugar Tastes Like).

Posted by bclund in Trading and tagged with , ,

From time to time when I am at a social event, out playing poker, or rooting through the dumpster behind Arby’s, someone will ask me, “what do you do for a living?”  I usually respond that I do a “number of things”, one of which is trading stocks.

After that they generally ask me a series of questions about my trading style and how I feel about the market in general.  Often they will tell me about their own forays into trading and then say something like this…

“I have been paper trading for about six months now, and I am KILLING IT!!! I am thinking about quitting my job and starting to trade full-time.  By the way, where is the local Ferrari dealership?”

Since I like to see people in terrible pain and suffering, I always encourage them to “go for it!” (Just kidding).

I am no fan of paper trading because it gives you an artificial sense of detachment from your trades, both losses as well as wins, since you are not using real money.

Almost every person out there will change their “real money” trading methodology once they experience the euphoria of a winning trade or the depression of a losing one.

Occasionally I will find someone from a very “rules based” background (think engineers, airline pilots, etc) who will actually trade real money the same way that they paper trade, but for vast majority of people, they just can’t.

Ooooh...."The Rack". Yeah, real scary. Try day trading!

I have a lot of issues with Alexander Elder, as well as any author whom I suspect makes more money from writing books about trading than actually trading.  That being said, I remember reading  ”Trading For a Living” and thinking the book spent too much time on the psychology of trading.

Being young and foolish, I also remember thinking, “what the hell does all this crap have to do with trading?  You buy a stock, if it goes up, you make money, and if it goes down, you lose.”

Needless to say, the point of that book was to try to save the novice trader from blowing their account out before they really began to understand how important emotions, mindset, and pre-conceived perceptions about the market are in their trading success.  Those who paper trade can never understand that.

It is like trying to find out what sugar tastes like without actually tasting it.  You can read about it, you can talk to friends about it, you can study its molecular structure, but until you actually take some and put it on your tongue, you can never know what it really is all about.

So to that would-be trader I suggest a better alternative, which is to trade with a very small amount of money.  Even if you are only risking $50 or $100 dollars on a trade I believe it will tell you more about your abilities in trading than any amount of paper trading.

It will give you “skin in the game” and focus your trading.  It also gives you time to build a methodology, which if proven sound over time, can be scaled up as your trading experience and account equity grow.

And for more (and better) books on the psychology of trading, try Trading In The Zone by Ari Kiev, and The Disciplined Trader by Mark Douglas.

(Note: If you are new to my blog, I post about all sorts of things.  Sometimes it involves something extremely personal, like creating a 30K baby or my Monster Trades.  Other times it deals with hot ex-porn stars who trade stocks.  And sometimes it’s about how to avoid “suicide”.  But a good place to start is The Best of bclund.  If you like what you read, please tell a friend.  If you don’t, please tell two friends.)